By Claire Fiddian-Green, Richard M. Fairbanks Foundation via Indiana Capital Chronicle
Indiana's cannabis laws rank among the nation's most restrictive, yet three of its four neighboring states have legalized adult-use cannabis and the federal government has signaled interest in easing federal cannabis restrictions. Two RAND reports commissioned by the Richard M. Fairbanks Foundation found that 44 percent of Indiana residents live within 50 miles of a licensed out-of-state dispensary and 96 percent within 100 miles, making cannabis accessible to most Hoosiers regardless of state prohibition. Intoxicating hemp products—which can contain the same psychoactive compound as marijuana—are also widely sold at gas stations, convenience stores, and grocery stores statewide with limited oversight.
RAND's reports outline four policy options: maintaining current prohibition, reducing criminal penalties for possession, legalizing medical cannabis, or establishing a recreational adult-use market. The reports do not endorse a specific approach but identify 14 policy considerations relevant to legal market design, each with distinct public health and economic implications.
Cannabis use in Indiana has more than doubled over the past decade, with the sharpest growth among adults 26 and older. In 2024, approximately 1.3 million Hoosiers used cannabis, spending an estimated $1.8 billion on marijuana products. That year, Indiana recorded more than 13,000 cannabis-related arrests—over 90 percent for possession and more than 75 percent tied to non-cannabis charges. The state spends an estimated $10 million to $20 million annually on cannabis enforcement.
Legalization could reduce those costs but not eliminate them. After start-up expenses, regulating an adult-use market could cost the state low tens of millions of dollars per year, potentially offsetting savings from reduced criminal justice spending. Projected annual revenue from adult-use legalization is approximately $180 million—about 1 percent of Indiana's general fund—far below some figures that have been cited. By comparison, Indiana's cigarette and alcohol taxes combined generated $385 million in 2025, per the Indiana Department of Revenue.
Ongoing complicating factors include the persistence of illegal markets, the proliferation of intoxicating hemp products, and the possibility of federal legalization. Indiana's policy decisions will carry lasting consequences for Hoosiers and will likely be watched by other states.
Claire Fiddian-Green is president and CEO of the Richard M. Fairbanks Foundation.
This piece was first published by Indiana Capital Chronicle.